KUALA LUMPUR (Oct 22): Datuk Seri Najib Razak has not paid any of the RM1.69 billion additional income tax imposed on him since 2019, and this has resulted in the Inland Revenue Board (IRB) initiating a bankruptcy notice on him.

IRB senior counsel Norhisham Ahmad told the High Court on Wednesday (Oct 22) that ever since the additional income tax was imposed on Najib in 2019, the former PM has not paid any sum at all, resulting in the IRB filing an originating summons to seek a summary judgment on him.

“After the summary judgment was obtained at the High Court and upheld by the Court of Appeal and Federal Court, Najib had also failed to pay any sum.

“This has resulted in the IRB issuing a bankruptcy notice, and this has been applied. A stay of the proceeding was dismissed by the High Court deputy registrar (resulting in this proceeding). Since 2019, no payment has been made by Najib,” Norhisham said in opposing a stay of the bankruptcy notice.

Norhisham added that the Income Tax Act 1967 uses the “pay first, dispute later” principle, and this was affirmed by the Federal Court in October 2023 when it upheld the summary judgment on Najib and his son Datuk Nazifuddin Najib.

The bankruptcy notice was issued to Najib on Feb 4, 2021, after the IRB had obtained a summary judgment at the High Court and the hearing was subsequently stayed pending the former prime minister’s appeal to the apex court, which was finally heard in October 2023.

Following that, the hearing of the bankruptcy notice was held, and in August last year, High Court Deputy Registrar Kamarul Aris Kamalluddin refused a stay of the notice, which brought about the proceedings on Wednesday before Judicial Commissioner S Suhendran @ Saheran Abdullah.

Norhisham pointed out that Section 97 of the Insolvency Act 1967 stipulates that the court can only grant a stay following the bankruptcy petition being issued, but this is not the case here, where only a bankruptcy notice and not a petition has been issued.

“Hence, this court does not have the power to allow a stay of the bankruptcy notice issued. Furthermore, if a stay is allowed, it would open floodgates for people receiving a notice to apply for a stay at the High Court and avoid paying taxes,” he said.

Norhisham said that while Najib and his son have appealed to the Special Commissioner of Income Tax (SCIT), the issuance of a bankruptcy notice is allowed as it is part of the recovery process.

“If this court would allow the stay, it would defeat the whole provision and policy of the Income Tax Act 1967,” Norhisham said, adding that for these reasons, Najib and Nazifuddin’s application for a stay is premature, as there has been no bankruptcy petition issued against them and there are insufficient grounds for the court to allow a stay of execution.

Norhisham said that should the SCIT allow an appeal, the IRB has the capability to return the payment to Najib.

The IRB had obtained a summary judgment where Najib owes RM1.695 billion and Nazifuddin owes another RM37.64 million to the IRB.

Defence counsel Muhammad Farhan Shafee, who appeared with Wee Yeong Kang, said the sum, which has now reached RM1.7 billion for Najib, is the highest imposed on an individual.

He said their argument for a stay was that the additional tax was imposed in 2019 for the assessment years of 2011 to 2013, which accounts for 85% of the total sum, and this is outside the limitation period.

Hence, Farhan said there are arguments as to whether such an imposition of the additional tax can be made.

However, Norhisham countered that such arguments had been ventilated during summary judgment proceedings, in which the courts found in the IRB’s favour, and should not be raised here again.

Farhan further told the court that Najib is still faced with several ongoing civil proceedings, with two decisions pending on the SRC International Sdn Bhd’s RM4 billion suit and the SRC International and two others’ RM42 million suit against Najib.

“These ongoing cases would be affected by the bankruptcy order. If a bankruptcy order were to proceed, it would run contrary to the administration of justice,” Farhan added.

Farhan argued that as Najib and Nazifuddin’s appeal is still pending before the SCIT, which would hear it in September next year, the High Court should grant a stay of the bankruptcy notices pending the hearing before the SCIT.

Furthermore, he added that there is no threat of Najib absconding, as his assets had been frozen and he is currently serving a prison sentence.

Farhan also said that if Najib is declared bankrupt, it would also affect his pensions.

Najib has been imprisoned since August 2022, after being found guilty of seven charges in relation to SRC International.

After hearing submissions, J C Suhendran fixed Nov 17 to deliver a decision on whether to allow Najib and Nazifuddin’s appeal for a stay.

Read also:
Najib: Despite blatant misconduct, key 1MDB officials never brought to justice
Najib tells court: 'I seek equality, not immunity', in fiery 1MDB-Tanore trial statement, questioning why others involved have not been prosecuted
Full text of Najib’s impassioned speech to the 1MDB-Tanore court
Court dismisses Najib and son’s applications to stay bankruptcy proceedings over unpaid taxes.
Najib and son Nazifuddin's bankruptcy stay hearing set for Sept 8